During the last fiscal year, we have developed and applied our knowledge-based elastic model of DNA to two closely related problems: positioning of nucleosomes and differential p53-induced regulation of transcription. (1) A novel mechanism of DNA folding in chromatin: Implications for nucleosome positioning. The bending of DNA in nucleosome is accompanied by the lateral displacements of adjacent base pairs, which are usually neglected. We have found, however, that the shear deformation, called Slide, plays a much more important role in DNA folding than was ever imagined. Remarkably, the large Slide deformations imposed on DNA by histones govern both the DNA superhelical trajectory and the positioning of nucleosomes. The energy cost of these deformations is sequence specific - the high-affinity nucleosomal sequences are aligned such that the most easily deformed base-pair steps (TA and CA:TG) occur at sites of large positive Slide and negative Roll (the minor groove bending). Our findings agree with the results of in vitro sequence selection (SELEX) experiments. An important feature of our approach is incorporating all the essential degrees of freedom of 'real' DNA, as opposed to conventional 'elastic rod' model - the latter ignores the lateral Slide displacements of base pairs, and as a result, fails to account for the preferable positioning of the pyrimidine-purine (YR) steps. The close correspondence between the predicted locations of YR dimers and the observed YR sites on high-affinity nucleosomal sequences demonstrates the potential advantage of our 'structural' approach in the prediction of nucleosome positioning. Next, we will use this approach for the analysis of positioning of the linker histones. (2) DNA bending in the tetrameric p53 complex: Sequence analysis in the chromatin context. The tumor suppressor protein p53 acts as a transcription factor when bound to DNA response elements (RE), usually consisting of two decamers RRR-CWWG-YYY separated by a variable spacer (W=A or T; in most cases, the central tetramer is CATG). Earlier, we predicted significant DNA bending and overtwisting upon binding to p53. This year, two dimeric p53-DNA complexes have been resolved crystallographically; both demonstrate CATG bending into the major groove, in accord with our prediction. The p53 core domains are positioned on the outer side of the DNA loop that is important for p53 interaction with the nucleosomal DNA. In other words, wrapping DNA around the histone core can facilitate p53 binding by exposing the cognate DNA site in the bent conformation favorable for the p53-DNA recognition. The functional importance of these findings is best illustrated by comparing the high affinity of p53 to RE associated with cell cycle arrest (CCA-sites), with the low affinity to RE associated with apoptosis (Apo-sites). This difference cannot be explained by the p53-DNA binding constants measured for free DNA. Therefore, we examined the long-range genomic environment of these p53 response elements. Unexpectedly, the Apo-sites are clustered around the transcription start sites (TSS) of the target genes and located within GC-rich regions, while the CCA-sites are scattered further away from the TSS and located in AT-rich regions. Based on our analysis of the high-affinity nucleosomal sequences, we conclude that stable, positioned nucleosomes are likely to form near the CCA-sites, but not near the Apo-sites. Thus, the different nucleosomal organization of the two sets of p53 response elements may be a key factor affecting p53-DNA binding (increasing, in agreement with experimental results, the p53 affinity to the CCA-sites and decreasing its affinity to the sites associated with apoptosis). This example emphasizes direct correlation between the selection of p53-induced tumor suppression pathway (apoptosis or cell cycle arrest) and structural organization of the corresponding p53-binding sites in chromatin.